Oregon lawmakers are considering a measure that could help developers convert commercial buildings into homes.
The idea of the bill is straightforward: turn empty, boarded-up commercial or office buildings, many vacated during the COVID-19 pandemic, into much-needed housing units. The upside is desperately needed housing and hopefully more vibrant and safe downtowns. But the conversions would be costly, and turning a building that has two toilets into one with 12 also stresses existing infrastructure.
Lane County Commissioner David Loveall, a real estate developer, told legislators this week he’s seen it work. He’s converted several dilapidated buildings in downtown Springfield into living units.
He recently purchased a 5,000 square foot building in Springfield for $600,000. He plans to turn it into 12 apartments. The remodel brings a significant upside for the city, he told lawmakers. Currently, the property taxes on the building are about $2,000 a year. When he’s done they will be closer to $14,000 a year.
There have been several buildings converted in downtown Springfield recently, he said, and they have changed the city’s character.
“I sit down there at a picnic table now (and there are new) restaurants and new commercial and retail spaces and a grocery store and 34 new families that live downtown,” Loveall said. “They have a walkable neighborhood. They ride their bikes close to the bike path and we have little string lights that light up the neighborhood … And I hear people routinely say, ‘Wow, I never believed or dreamed that downtown Springfield could be such a cool place.”
The way it’s currently drafted, House Bill 2984, would require local governments to allow for the conversion of commercial buildings without needing a zone change or conditional use permit, as long as the property is already inside the city’s urban growth boundary.
The legislation would also require the housing be made available for families to either own or rent who earn 120% or less of area median income, but the affordability cap was debated during the committee hearing; several lawmakers questioned whether it would make the process extra burdensome. The measure also prohibits local governments from requiring a certain number of parking spots and it would waive system development charges, or SDCs for the developers.
Scott McClure, the city administrator for Turner, Oregon, told lawmakers the bill would hurt communities like his and allow developers to bypass local city planning.
“Every town carefully determines which uses should be in which areas,” McClure wrote in testimony to the lawmakers. “This is the essence of planning … This bill would just throw out planning that typically involves many hours of staff work, citizen involvement and approval by the town’s governing body.”
McClure and others also pointed out that system development charges are needed for added infrastructure costs that would come with some of these conversions.
“Towns do not charge system development charges just because,” he said. “They are necessary to keep our utilities, streets, parks and other facilities operating at an acceptable level.”
State Rep. Pam Marsh, D-Ashland, is the chief sponsor of the bill. The state is in the midst of a big push for more housing production, she noted.
Gov. Tina Kotek has issued an executive order calling on Oregon to produce 36,000 new housing units a year, up from the 22,000 or so builders create annually now. It’s an aggressive goal.
Marsh said it’s time for the state to “double down on housing production.”
“We need to think differently about how we use existing structures to quickly produce housing,” Marsh said.
The bill is currently being considered in the House Committee on Housing and Homelessness.